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TMI Blog2015 (7) TMI 1376X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of the case, briefly, are as under :- 2.1 The assessee (HUF), engaged in business as transport contractors for M/s. Tata Motors Ltd. transporting chasis from the production point to regional outlets for which it engaged subcontractors. The assessee filed its return of income for Assessment Year 2010-11 on 29.9.2010 declaring total income of ₹ 4,42,876 after set off of business loss of ₹ 26.23 lakhs. In the course of scrutiny proceedings, the A.O. observed that the assessee had incurred direct expenditure of Rs.;13.20 Crores against receipts of ₹ 13.53 Crores on account of transport charges but had short deducted tax at source on certain payments and in certain cases had not remitted the TDS within the due date of filing of the return under Section 139(1) of the Income Tax Act, 1961 (in short 'the Act') and therefore these amounts were liable for disallowance under Section 40(a)(12) of the Act. On being queried in this regard, the assessee submitted that TDS was made at 1% and subsequently on realising that TDS was to be made at 2% of the amounts paid, the balance TDS was paid on 31.1.2011 along with interest under Section 201(1A) of the Act. The Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng aggrieved by the order of the CIT (Appeals) dt.18.7.2014 for Assessment Year 2010-11, has preferred this appeal raising the following grounds :- 1. The order of the learned CIT (Appeals), Mysore in so far as against the appellant is against the law and facts and circumstances of the case. 2. The learned CIT (Appeals) has grossly erred in sustaining the disallowance of ₹ 3,42,86,912 under section 40(a)(ia) of the Act. 3. The learned CIT (Appeals) ought to have allowed the claim of the appellant considering the insertion of the second provision to the section 40(a)(ia) of the Act. 4. The learned CIT (Appeals) has grossly failed to appreciate that the disallowance under section 40(a)(ia) has to be restricted to amounts payable as at the end of the accounting year. 5. The learned CIT (Appeals) has grossly failed to appreciate that the appellant has deducted tax at a lower rate due to misinterpretation of the law. 6. Your appellant craves for leave to add, amend or alter all or any of these grounds of appeal. 7. For these grounds and such other grounds as are advanced at the time of hearing of the appeal, the appellant prays that the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, the learned Departmental Representative supported the orders of the authorities below. 5.3.1 We have heard the rival contentions on the ground at S.No.5 and perused and carefully considered the material on record; including the judicial pronouncements cited and placed reliance upon. It is not in dispute that the assessee had made short deduction of tax at source @ 1% instead of 2% on certain payments and failed to remit the said TDS within the due date of filing the return of income for Assessment Year 2010-11 under Section 139(1) of the Act. On examination by the Assessing Officer, the assessee explained that subsequently, on realisation that TDs on the said payments were to be made @ 2% thereon, instead of 1% as had been done by the assessee, the balance TDS was paid on 31.1.2011 along with interest under Section 201(1A) of the Act. The Assessing Officer, on examination of the assessee's claim, was of the view that deduction of tax at a lower rate cannot be taken as TDS made in accordance with the provisions of Chapter XVII-B and, following the decisions of the Chennai ITAT in the case of Frontier Offshore Exploration (I) Ltd. (supra) and Pixie Enterprises (supra), held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I of the Act, thereby lesser deduction of tax. The revenue has made out a case of lesser deduction of tax and that also under different head and accordingly disallowed the payments proportionately by invoking the provisions of section 40(a)(ia) of the Act. The ld. CIT, DR also argued that there is no word like failure used in section 40(a)(ia) of the Act and it referred to only non-deduction of tax and disallowance of such payments. According to him, it does not refer to genuineness of the payment or otherwise but addition under section 40(a)(ia) of the Act can be made even though payments are genuine but tax is not deducted as required under section 40(a)(ia) of the Act. We are of the view that the conditions laid down under section 40(a)(ia) of the Act for making addition is that tax is deductible at source and such tax has not been deducted. If both the conditions are satisfied then such payment can be disallowed under section 40(a)(ia) of the Act but where tax is deducted by the assessee, even under bonafide wrong impression, under wrong provisions of TDS, the provisions of section 40(a)(ia) of the Act cannot be invoked. Here in the present case before us, the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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